US should stay off further stimulus: John Taylor

Aug 26, 2010, Palo Alto (LBO) – Though US economic growth is ‘fizzling out’ there is unlikely to be a double dip recession and new ad hoc stimulus measures should be avoided to give a sense of stability for economic agents to act, a top monetary economist has said. “My own view is that for the US we have tried so many different stimulus ideas,” John Taylor, economics professor at Stanford University, Palo Alto, Calif., told a group of visiting economists and journalists earlier this month.

“We should hold off for a while and get back to basics. Our debt is growing very rapidly, people don’t know what is going to happen to taxes (a tax break) scheduled to end on January 01.

“Then there is monetary policy. People don’t know what the Fed is up to. I think the best thing now is to really stay off for a while.”

Firing Uncertainty

Taylor said uncertainty increased among economic agents when there were further expectations of government interventions.

“It looked for a while like some of those things (stimulus measures) were working and a recovery started pretty well last year,” Taylor said.

“By the end of last year we had growth in the United States close to 6.0 percent.

“But since then things have kind of fizzled out aga